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Recurring revenue finance

Recurring revenue finance for SaaS and subscription businesses

Growth Business Finance arranges recurring revenue loans for UK SaaS, software and subscription businesses, sized on annual recurring revenue rather than EBITDA: up to 70% of ARR, from £200k to £100m, across specialist lenders and banks.

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No credit search and no upfront fee.

Reviewed by Tom Renshaw, Managing Director. Updated .

of annual recurring revenue
Up to 70%of annual recurring revenue
facility size
£200k to £100mfacility size
often interest-only at first
3 to 5 yearsoften interest-only at first
minimum ARR and cash, not EBITDA
ARR covenantsminimum ARR and cash, not EBITDA

What is recurring revenue finance?

Recurring revenue finance is a term loan sized on a business's contracted, repeatable revenue rather than its profits. Lenders can lend up to around 70% of annual recurring revenue (ARR), with covenants set on minimum ARR and cash rather than EBITDA. That lets a growing SaaS or subscription business borrow while it is still investing heavily and before it reports a profit.

It is usually used to fund growth, extend runway between equity rounds, buy a competitor or a book of customers, or reduce how much equity the founders give up. Terms are typically 3 to 5 years, often interest-only at first.

Recurring revenue finance or venture debt?

Venture debt is lent alongside a recent equity round and relies heavily on the investors behind the business. Recurring revenue finance relies on the quality of the revenue itself: retention, churn, contract length and gross margin. Many businesses with strong ARR can borrow without a new equity round. See technology and SaaS finance.

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Recurring revenue finance

How it works

  1. 1

    We review your revenue data

    ARR, retention, churn, cohorts, gross margin and cash runway.

  2. 2

    We size the facility

    As a share of ARR, tested against your forecasts and cash burn.

  3. 3

    We approach the right lenders

    Specialist recurring revenue lenders, growth debt funds and bank technology teams.

  4. 4

    Lenders complete due diligence

    On revenue quality, contracts and your financial model.

  5. 5

    The loan is drawn

    In one go or in tranches as ARR grows.

Who it suits

  • SaaS and software businesses with strong retention and contracted revenue
  • Subscription businesses, from B2B data and platforms to managed services
  • IT services and managed service providers growing by acquisition
  • Founders who want to fund growth without another dilutive equity round
  • Businesses that are investing heavily and not yet profitable on an EBITDA basis

What lenders look at

Revenue quality
How much revenue is contracted and recurring, and for how long.
Retention and churn
Gross and net revenue retention and customer churn by cohort.
Growth
ARR growth rate and the pipeline behind the forecast.
Gross margin
How much of each pound of revenue is left after delivery costs.
Cash runway
Burn rate and how long the business can run on its cash and the new debt.
Investors and management
The team, the shareholders and any planned equity raise.
At a glance

Typical terms

Typical terms
Facility size£200k to £100m
SizingUp to 70% of annual recurring revenue
CovenantsMinimum ARR and cash rather than EBITDA
Term3 to 5 years, often interest-only at first
UsesGrowth, runway, acquisitions and refinancing
PricingPriced on revenue quality, growth and cash runway

All figures are "up to" and subject to status and lender approval.

Our process

How GBF runs the process

We start with your ARR, retention and cohort data, your model and your plans, and work out how much the business can sensibly borrow and on what covenants. We prepare the credit case, approach the specialist lenders, funds and banks that underwrite recurring revenue, compare terms side by side, including warrants, fees and covenants, and run the process through to drawdown.

  • One senior adviser from first call to completion
  • A credit paper lenders take seriously
  • Indicative terms compared side by side
  • £0 upfront fee
Related facilities

Related facilities we arrange

Technology and SaaS financeRecurring revenue loans, R&D tax credit advances and buy-and-build financeBusiness loansTerm loans, RCFs and acquisition financeAcquisition financeDebt to buy a competitor or a book of customersCash flow lending £5m to £25mDebt sized on EBITDA, CFADS or recurring revenueBusiness growth finance guideHow UK companies fund expansion with debt
FAQs

Recurring revenue finance: common questions

How much can a SaaS business borrow against its ARR?

Lenders can lend up to around 70% of annual recurring revenue, depending on retention, growth, gross margin and cash runway.

Do I need to be profitable to get recurring revenue finance?

No. Covenants are usually set on minimum ARR and cash rather than EBITDA, so businesses that are still investing for growth can borrow.

How is recurring revenue finance repaid?

Usually over 3 to 5 years, often with an interest-only period at the start before capital repayments begin.

Is recurring revenue finance cheaper than equity?

It usually costs founders less than giving up equity, because the debt is repaid rather than owning part of the business forever. Some lenders ask for warrants, which we negotiate as part of the terms.

What size of facility does GBF arrange?

Growth Business Finance arranges recurring revenue finance from £200k to £100m, across specialist lenders, growth debt funds and banks.

Is GBF a lender?

No. Growth Business Finance is a commercial finance broker and debt adviser. Finance is subject to status and lender approval.

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